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The Costs of the Embargo

The 47-year-old blockade now costs the United States far more than it costs Cuba.

by

Margot Pepper

On January 1, Cuba celebrated the 50th anniversary of the revolution
against the U.S.-backed Batista regime. For 47 of those years, Cuba has
suffered under what U.S. officials call an “embargo” against the
Caribbean nation. Cubans’ name for the embargo—el bloqueo (the
blockade)—is arguably more apt, given that the U.S. policy also aims to
restrict other countries from engaging in business with Cuba.

What’s surprising is that while the blockade continues to take
a considerable toll on the Cuban people, it costs the United States far
more, and the gap is widening. Given the economic meltdown, it is only
fitting that a growing chorus of diverse voices is calling for an end
to the costly vendetta.

The original justification for the embargo was Cuba’s
expropriation of “some $1.8 billion worth of U.S.-owned property,”
according to the U.S. Foreign Claims Settlement Commission. In turn,
Cubans argue that early in the century, the United States had seized
control of 70% of Cuban land and three-quarters of Cuba’s primary
industry. By the 1950s, as a result of U.S. colonialism and preceding
Spanish rule, five out of six Cubans lived in shacks or were homeless,
80% of Havana suffered from hunger and unemployment, and two out of
three Cuban children didn’t attend school. Cubans say such conditions
left them no recourse but to expel the Yanquis, just as the Yankees had expelled the British in 1776.

Today, U.S. public opinion is turning against the embargo. A
majority—52%—wants the embargo to be lifted, with 67% favoring an
immediate end to the travel restrictions, according to the Cuba Policy
Foundation (CPF), a nonprofit run by a former U.S. ambassador. Recent
polls have even shown that a majority of Miami Cubans now support
lifting the embargo.

These percentages might be even higher if the U.S. public were
aware that the blockade is actually costing them more than the Cubans,
something that is finally beginning to dawn on the U.S. business
community. Representatives of a dozen leading U.S. business
organizations, including the U.S. Chamber of Commerce, signed a letter
in December urging Barack Obama to scrap the embargo. The letter pegs
the cost to the U.S. economy at $1.2 billion per year. The CPF’s
estimates are much higher: up to $4.84 billion annually in lost sales
and exports. The Cuban government estimates the loss to Cuba at about
$685 million annually. Thus the blockade costs the United States up to
$4.155 billion more a year than it costs Cuba.

The U. S. government also spends $27 million each year to
broadcast Radio and TV Martí, even though the television signal is
effectively blocked by the Cuban government. The largely futile
propaganda effort has cost U.S. taxpayers half a billion dollars over
the last twenty years, according to the Council on Hemispheric Affairs.

Beyond the economic costs, the blockade has deprived U.S.
citizens of Cuba’s medical breakthroughs. Cuba has developed the first
meningitis B vaccine; treatments for the eye disease retinitis
pigmentosa; a preservative for un-refrigerated milk; and PPG, a
cholesterol-reducing drug gobbled up by foreigners for its side effect:
increased sexual potency. And last summer Cuba released CimaVax EGF,
the first therapeutic vaccine for lung cancer. The drug triggers an
immune response that extends life in lung cancer patients and can ease
breathing and restore appetite.

The blockade has always cost the United States more, but the
gap has widened considerably. By 1992, U.S. businesses had lost over
$30 billion in trade over the previous thirty years, according to
researchers from Johns Hopkins. At that time, Cuba’s loss for the same
period was smaller, but not by much: $28.6 billion, according to Cuba’s
Institute of Economic Research. Following the dissolution of the Soviet
Union in 1991, Cuba’s diversification and increased trade with other
countries has widened the gap between the costs to Cuba and the costs
to the United States.

While the dollar cost to the United States may be higher, Cuba
has suffered a greater economic hit relative to its size and resources.
Although lifting the blockade will inevitably boost Cubans’ living
standard, the Cuban economy will still be saddled with its colonial
legacy as a mono-crop producer. Unequal trade terms enforced by
treaties and organizations such as the World Trade Organization, the
World Bank, and the International Monetary Fund maintain formerly
colonized countries as underdeveloped purveyors of raw materials,
subsidizing the high standard of living in industrialized countries. It
is useful to remember this uneven playing field whenever making
U.S.-Cuba comparisons.

Regardless of all these obstacles, the socialist island has
managed to provide its inhabitants with what the United States, one of
the most affluent countries in the world, so far has not: free
top-notch health care, free university and graduate school education,
and subsidized food and utilities. Meanwhile, 36.2 million people go
hungry in the United States and 47 million lack health coverage.
Indeed, Cuba compares favorably to the United States on a number of
basic social factors:

Housing: There is virtually no homelessness in Cuba.
Thanks to the 1960 Urban Reform law, 85% of Cubans own their own homes
and pay no property taxes or interest on their mortgages. Mortgage
payments can’t exceed 10% of the combined household income.

Employment: Cuba’s unemployment rate is only 1.8% according
to CIA data, compared with 7.6% (and rising) in the United States. One
factor contributing to Cuba’s low unemployment is undoubtedly the
350,000 jobs that have been recently created by the burgeoning
sustainable urban agriculture program, one of the most successful in
the world, according to U.S.-based economist Sinan Koont.

Literacy: The adult literacy rate in Cuba (99.8%) is higher
than the United States’ rate (97%), according to the United Nations
Development Programme (UNDP).

Infant mortality: Cuba has a lower infant mortality rate (4.7 per 1000 live births) than the United States’ (6.0).

Prisons: Cuba even does better on prisons. Its rate of
incarceration—estimated at around 487 per 100,000 by the UNDP—is among
the highest in the world, yet it is considerably lower than the U.S.
rate of 738 per 100,000. Now that the number of political prisoners
Cuba locks up is in decline, according to a February Associated Press
news release, there is even less justification for the blockade.

The fact that a poor, formerly colonized country can meet its
citizens’ basic needs, while outperforming the United States on key
measures, underscores how inexpensively the United States could follow
suit. Cuba’s example could prove instructive to President Obama and his
constituents as the United States faces economic collapse. And herein
may lie the real motivation of the blockade, and its most significant
cost: it keeps people from making such comparisons first-hand. If the
only concrete threat the Cuban Revolution poses to the United States
these days is the threat of a good example, isn’t it high time we bury
the blockade?

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